Amcor mill site sells for $120 million

Melbourne is set to gain a new inner-city mini suburb housing 3000, with the sale of Alphington's Amcor paper mill site on Heidelberg Road for $120 million, believed to be the highest sale price for a Victorian residential site.

Paper products company Amcor will announce on Monday that it has finalised a deal to sell the 16.5-hectare site to a consortium led by Alpha Partners and including Wesfarmers, the company that owns Coles and Bunnings.

Amcor first announced plans to sell it for redevelopment in 2008 but did not fully vacate the site until late last year, when it moved its paper-recycling business to a new $500 million facility in Sydney.

The site was rezoned for mixed use by the former Labor planning minister Justin Madden in 2009, when he approved plans for ''in excess of 2000 homes as well as retail, office and community facilities along the Yarra River''.

It was marketed by Colliers in 2009 and again in 2011, and was expected to fetch $200 million.

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But plans to rebirth the prime site, seven kilometres from the CBD, have not run smoothly.

Residents represented by the Alphington Paper Mill Action Group have argued for strict height controls, with towers limited to six storeys - roughly the same height as the existing industrial buildings - and those on street frontages limited to three storeys.

The City of Yarra largely agreed, releasing in mid-June a revised development plan overlay that outlined some key stipulations for any development on the site. They included:

However, it added that ''council does not have the final say about changes to planning controls over the Amcor site. Instead, council's recommendations are sent to the Department of Community Planning and Development for the Minister for Planning to decide whether the changes should be incorporated into the Yarra Planning Scheme.''

A source close to the deal insisted that none of the proposals marketed in the past were representative of plans the new owners will take to the market.

The nature of facilities in the development has been another thorny issue, with the Alphington Paper Mill Action Group calling for inclusion of community and educational facilities. Cycling paths, cutting-edge sustainable design elements, a 50-metre river setback, and widening of the notorious Chandler Highway bridge over the Yarra River at the rear of the site are also on the locals' wish list.

The Alphington property has had its share of controversy.

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In the months since the facility closed it had become something of a dumping ground for waste material, prompting concerns over safety.

Even while the facility was running, it was problematic, with a number of fires breaking out in recent years, a toxic spill into the Yarra in 2012, and a series of notices issued by the Environment Protection Authority in 2011 ordering Amcor ''to address odour and waste management issues''.